Skip to comments.The Job Marketís February Crumble: The raw numbers tell the ugly story.
Posted on 03/08/2014 10:54:51 AM PST by SeekAndFind
Friday morning’s monthly jobs report  from the government’s Bureau of Labor Statistics showed a level of February job additions which the establishment press quickly portrayed as tremendous news.
The Associated Press described the results as “a welcome surprise ,” achieved “despite a blast of harsh winter weather.” Bloomberg News claimed  that “the U.S. economy is starting to shake off the effects of the severe winter weather.” Reuters heralded it  as an “upbeat sign for weather-beaten economy.”
Opportunistic Obama administration Labor Secretary Thomas Perez crowed : “We’re moving in the right direction.”
Do not be fooled. Especially be wary of  “the prevailing view of economists,” which is that “when the weather warms up, so, too, will the U.S. economy.”
All of the “surprise” in Friday’s employment report lies in how BLS could possibly have converted truly awful raw data into decent-looking numbers 175,000 payroll jobs added overall, with 162,000 of them in the private sector after performing its seasonal adjustment calculations. We had better hope that the raw numbers came in as weak as they did due to February’s rough weather. If they didn’t, we may be facing the worst year in the job market since 2010.
For those unfamiliar with the process, “seasonal adjustment ” is “a statistical method for removing the seasonal component of a time series that is used when analyzing non-seasonal trends.” In layman’s terms, it’s an attempt to smooth out results which fluctuate throughout the year to present them in proper context.
For reasons which I have never understood, economists, analysts, and especially reporters seldom go beyond the seasonal adjustment calculations to look at the raw, not seasonally adjusted data, aka the report presenter’s best estimate of what actually happened. This has always been a negligent practice; but it’s especially dangerous now. That’s because, as I wrote last year , “five years of the Obama economy render the government’s seasonally adjusted numbers virtually worthless.” As we near six years since the Pelosi-Obama-Reid economy  began, its erratic nature continues to disrupt normal seasonal patterns.
Let’s look at how bad February really was, and at how the government’s seasonal calculations larded tons of lipstick onto a couple of really ugly pigs:
February’s figure of 750,000 jobs added overall was the worst February since 2010, the final month of the Obama economy’s extended “jobs recession.” (The administration likes to crow about its 48 months of consecutive though sometimes tepid job growth, but always overlooks how it managed to unprecedentedly extend job losses a full eight months after the recession officially ended in June 2009 .) “Somehow,” that result, which is 288,000 jobs below last year’s 1.038 million, converted to 175,000 seasonally adjusted jobs added, only 105,000 fewer than last year’s 280,000. In the context of both February 2013 and February 2012 BLS seasonally adjusts using five years of data, but weighs recent years more heavily the reported result should have been barely above zero, in which case we’d be seeing the press citing the weather as the go-to excuse instead of something the “resilient” job market heroically overcame.
The private sector’s reported 300,000 job additions in February is 46 percent lower than last February’s 553,000, and is thus even more troubling. In historical context, its seasonally adjusted result should also have come in barely positive.
Unfortunately, those who suspect that BLS may have fudged its presentation now have some basis for holding that belief. Since January 2013, fever swamp leftist Erica Groshen  has occupied an influential perch  as its commissioner of Labor Statistics. As an opponent of her nomination said in 2012 , “To place at the head of the bureau someone with a far-left record … has the potential to diminish the believability of the information that they produce.” The narratives in BLS’s monthly employment reports during the past year have clearly come across as more selective, inconsistent, and politicized than in the past. One would hope that Groshen’s influence only extends that far, but it would be foolish to dismiss the possibility that it doesn’t go further.
The job market’s clearly bad February could not have come at a worse time, as I’ll explain on the next page.
The five months from February through June have traditionally been the time when employers are most actively hiring. As a result, the economy almost always adds millions of jobs. A job market with as much unutilized and underutilized labor as this one should be adding at least 5.5 million not seasonally adjusted (i.e., actual) jobs during these five months. As seen above, the Obama economy hasn’t come anywhere close to achieving that result in any of the three years since the jobs recession ended, falling short by about 1.4 million in 2011 and 2013, and by about 1.6 million in 2012.
Based on February’s awful results, this year may be shaping up to be even worse than the previous three, just in time for what is supposed to be peak hiring hence my earlier suggestion that we had better hope that February’s bad weather is what seriously hurt the results. If it’s not the cause, we’re in for a very rough ride in the coming months.
It’s not too early to raise the distinct possibility that February’s awful results have far more to do with destructive federal government policies and programs than with ice and snow. Of special concern is its newest and most comprehensive initiative. Obamacare anyone?
This year is the first time in my life I have ever heard the news media proclaiming the weather as a serious factor driving economic statistics.
That’s a GREAT point. Now that you say that neither have I.
The government can use their own numbers and make macro claims that things are getting better, but I don’t see it based on my own observations. With the exception of the stock market and energy sector it’s not there. The stock market appears to be a bubble. The shale gas boom is a good thing. Everything else looks anemic to me.
How many small businesses are barely hanging on or even losing money considering how much of our economy is service/luxury based? Empty strip malls and larger retail outlets closing are not signs of economic health. This is before the full impact of Obamacare is felt by businesses and it will negatively impact jobs.
I am not optimistic about how this all ends.
Yes, yes, yes, but was it “unexpected”?
Its all going to crash and we know it
Oh, the moochers and deadbeat contingent at FR! Hey, why should Republicans make an issue of unemployment and the Democrats contribution to it when they can spend all their time beating up on the unemployed?!
And away we go...
Nothing that MADE IN USA won’t fix. Now if there was only a candidate, we would be back on track to middle class prosperity and voting again for the GOP.
All that global warming driving these winter storms. Or something.
They use any and every excuse they can. When employment went up because of Christmas workers, they didn’t mention it. It was real job growth. When they had that ATM charges debacle, the government blamed that as a job/economy killer. The nuclear plants in Japan, Tsunamis, earthquakes in Turkey, a cow farted in Spain, the Greek banking crisis, so-and-so didn’t get American Idol because of racism and employment went down - all that. Anything and everything.
The FACT is this government - the whole damned government - LIES!
With raw data, economists could explain what factors had an affect on it. Seasonal adjustment assumes that every February (for instance) is average. It's insane to take the thought process out of data analysis and expect good conclusions.
“...larded tons of lipstick onto a couple of really ugly pigs:”
Best description yet of what we’re up against.
Worst. President. Ever. Worst. Congress. Ever. Worst. Complicit. Media. Ever.
That’s the way to media reports that it’s not Mr.’O’s fault.
It’s Pres. Bush’s fault because he is responsible for global warming which changed the weather pattern.
I remember them blaming El Nino & La Nina
Your thoughts on Mr. Blumer’s viewpoint?
They love to claim “recovery” at every turn. I don’t see it on the ground level.
There is a disconnect on the economy between two groups of people - the average Joe (that’s me) and the macro-economist.
I see inflation in products we buy every day - energy, food, and other necessities. They see deflation in the big numbers (markets and banks). The stock market goes up and they are happy - the price of milk goes up and we are sad.
I won’t say one group is right and one is wrong. I think we just look at the world differently and perception is a powerful force in the economy.
I see the same type of thing in our area. Every strip center has more spaces “for lease” than are occupied. Even the large shopping areas - roofed and open have many empty stores. I see some familiar business close its doors every week. Hundreds and hundreds of homes for sale. There was a little uptick in the housing market, but it was gone in a flash. Now all the “For Sale” signs are being replaced with “For Rent” signs. Our business is dependent on small and medium businesses. None of them are hiring, all of them are tightening up as much as possible. None of them want to make capital outlays. They are so hesitant to make capital outlays that they often wait too long.
I fail to see any improvement in the economy in this area.
If only we had planted more magic unicorn bulbs.
I had no idea there was an app for that (pizza). It is a clever business innovation (but gives another reason to be sad about younger generations - their taste in pizza sucks).
My pizza place makes great pizza. They have a second (now only) store and I hope it survives. I will support it. I don’t care for the chains, and will rely more on my own pizza oven if it comes to that!
Agree with you; In general, provided they make good pizza (or whatever) I would much rather give my business to a small individually-owned joint than a Dominoes or RT or PH....except I really don’t eat pizza any more. I really like it of course, but I might just as well cut the pizza into rectangular strips and paste them directly onto my waist for the weight gain.
“How many small businesses are barely hanging on...”
I know - that is a problem for obama. But I’m sure once they feel the full brunt of obamacare, the “clinger-ons” will go away.
Pizza Hut has closed a few locations around here in the last couple of years, and I attribute it mainly to the fact that their pizza can't compete with the local pizza joint for taste and value. Maybe it's different in other parts of the country, but around here the local pizza joints are the kings of the industry.
I have strong doubts about the veracity of any figures put out by emperor 0bama’s regime. I may be a pessimist, but I think the REAL numbers are much, much worse.
The critical point that mainstream media always forgets is that more people are entering the labor force than the number of jobs being created. In reality this means that we are 25,000 thousand jobs deeper in the hole, not 175,000 jobs towards getting out of the hole.
I’ve heard it for years listening to hundreds and hundreds of company earnings calls.
Here’s the comment from BLS on weather:
How can unusually severe weather affect employment and hours estimates?
In the establishment survey, the reference period is the pay period that includes the 12th of the month. Unusually severe weather is more likely to have an impact on average weekly hours than on employment. Average weekly hours are estimated for paid time during the pay period, including pay for holidays, sick leave, or other time off. The impact of severe weather on hours estimates typically, but not always, results in a reduction in average weekly hours. For example, some employees may be off work for part of the pay period and not receive pay for the time missed, while some workers, such as those dealing with cleanup or repair, may work extra hours.
In order for severe weather conditions to reduce the estimate of payroll employment, employees have to be off work without pay for the entire pay period. Slightly more than 20 percent of all employees in the payroll survey sample have a weekly pay period. Employees who receive pay for any part of the pay period, even 1 hour, are counted in the payroll employment figures. It is not possible to quantify the effect of extreme weather on estimates of over-the-month change in employment.
In the household survey, the reference period is generally the calendar week that includes the 12th of the month. Persons who miss the entire week’s work for weather-related events are counted as employed whether or not they are paid for the time off. The household survey collects data on the number of persons who had a job but were not at work due to bad weather. It also provides a measure of the number of persons who usually work full time but had reduced hours due to bad weather. Current and historical data are available on the household survey’s most requested statistics page at http://data.bls.gov/cgi-bin/surveymost?ln.
We went out today here in Houston and every store’s parking lot is full. We had to drive around to find a parking space at Macy’s. And Macy’s ain’t cheap. (We were there to exchange a purse that my wife bought on line.)
If Houston can be used as a gauge, the economy is booming.
In the old Soviet Union, it was SOP to blame agricultural and Five Year Plan shortfalls on the weather.
Now that we have Marxists running our government, they will naturally blame our shortfalls on the weather. It is so much easier to blame that than the real reason (them).
Well we will see in the revision for sure. I posted the comment from BLS on weather in another lost in this thread.
I’m sorry but I don’t subscribe to the “Obama is cooking the books”. There are just too many really freaking smart economists, analysts, investors etc that they couldn’t pull it off. Couple it with all the other data (corporate profits, PMI, IP, housing, etc) that has showed a consistent, albeit slow, recovery and the jobs numbers fit. People may not want to hear it but it’s undeniable.
They (the media) were blaming the December economic figures on the weather even though the bad weather didn’t hit until the very end of the month.
Would agree with slow, not sure how consistent it’s been. And as you have pointed out often, it would be a lot better if government got out of the way.
Texas in general is doing better than most of the rest of the country. I wouldn’t extrapolate what you saw to the rest of the country.
Is it possible the job existed and somebody finally filled it ? Not new,not added,not created...just "hired".
Year over year February hires are down about 25%. Median income is down 5%. The average hours worked declined again in February. Record numbers on food stamps and SSID. Record low numbers of Americans working. Yes corporate profits and the markets are up but at whose expense? Americas savers. The Fed props up the market and corporate profits with near zero interest rates and screws Americas savers with their near zero interest rates. You see this all as a slow but steady rise toward prosperity. I see it as a freaking disaster happening in slow motion. How could we see it so differently?
“They love to claim recovery at every turn. I dont see it on the ground level.”
Very few people do; they just keep repeating the lie until it becomes the truth (it got their commissar re-elected).
“The stock market goes up and they are happy - the price of milk goes up and we are sad.”
The best way for a company to drive up its stock price is to announce layoffs of American workers - without fail. As for the increases in prices that we see with food staples, gasoline, etc., we’re still supposed to believe there is no inflation. I for one don’t know how many of the grocery name brands stay in business, as Americans are forced to buy no-frills groceries just to keep their families fed.
“This year is the first time in my life I have ever heard the news media proclaiming the weather as a serious factor driving economic statistics.”
You’re right; it is simply this year’s excuse in an attempt to save the Dems in the mid-terms (and to further cloud for Americans just how bleak the future is for so many of them). When I first saw this, I couldn’t help but think of the people I know who have been in denial for years about how bad things are. Bar/restaurant owners always offered similar weak excuses when their clientele fell, even when anyone present could recall when such places were packed year-round; they’d blame the weather, the season, anything else but the fact that discretionary spending is gone for many potential customers. Friends I know involved in fundraising had the same rose-colored glasses on when contributions consistently fell; they had every excuse (often inconsequential issues hardly related to their work) except acknowledging that those days of free-spending Americans were gone...
I guess people see what they want to see...
- Number of workers is near (1-2 months away) all time highs.
- GDP is at an all time high
- household net worth is at an all time high
Could iit be better? Absolutely and I’ve said so hundreds of times in these economic threads. Are there.problems? Absolutely and you’ve outlined some of them. I used the word “sub-optimal” in another thread on Friday to describe this recovery. Probably not strong enough. But there is a recovery. That is just undeniable.